The Cost of Equality: Democratic Capitalism at the Tipping Point?

This lecture presented by Robert Hunter Wade, a professor of the London School of Economics. Wade is a third generation graduate of the University of Otago. His address was hosted by the Centre for Theology and Public Issues and the Department of Political Studies. It was also heralded by an article in the Otago Daily Times on Saturday. As a result when I arrived just before six the lecture was moving into a slightly bigger theatre in the Archway Building. By the time the lecture began every seat was full, including the spare seats at the front. There were some people standing around the sides as university policy forbids sitting on the stairs.

There was an high turn out of people who looked like accountants and economists in the audience. They were nodding along to what was said quite a lot!

What follows is a write up of my notes:

There is no inequality in New Zealand, Bill English, Minister of Finance (yeah, right!)

His statistics for New Zealand showed that the top decile earn on average $300 000 dollars a year, the next two figures he highlighted were $100 000 and $30 000. The bottom decile earn on average $11 000 a year.

Inequality was coming down in the United States from 1929 (the financial crash) until 1980s. Since the initiatives of Ronald Reagan it has sky-rocketed again to levels equivalent to that of the heydays of the 1920s.

The share of the top 1% in the United States (Pre-tax growth)

1990 (Clinton) 45%

2000 (Bush) 73%

2010 (Obama) 93%

Economists talk about people as High Net Worth Individuals (H. N. W. I.s) when they have 1 million dollars in discretionary cash not tied up in property. When they get up to 30 million dollars economists call them Super High Net Worth Individuals.

The World Bank has not said anything about inequality of income for 20 years. Language of inequality is political and they prefer to see themselves as a non-political body. Instead they can talk about equity and development. Watch out for those code-words.

The United States may lead the non-Anglophone countries of North-West Europe on GDP per person, however North-West Europe leads the United States and other Anglophone countries when GDP is measured on hours worked.

I am a rich man, as long as I do not have to repay my creditors, Plautus, 300 B. C.

More unequal countries, and more unequal states in the United States, have higher average levels of social and health problems — Wilkenson and Pickett, The Spirit Level.

Oligarchic and Plutocratic elites are more unequal than ‘establishment’ elites. People are more likely to be considered aids or obstacles to ambitions, and treated as such.

The rich are way more likely to prioritize their own self-interests rather than the interests of others, Paul Piff.

Economic policy is being made by the 1% for the 1%. High-inequality capitalism is weakening democracy, pushing democratic market capitalism towards oligarchic impunity capitalism. It affects us all. There is no such thing as a non-peeing end in a swimming pool. (This is what they mean by the trickle-down effect!)

So what should progressives push for?

Capitalism should work for everyone — not just plutocrats.

Talk about inequality of opportunities.

Challenge the myth that inequality of incomes is necessary for economic incomes.

The economic costs.

More attention to pre-distribution: laws and regulations; market income distribution, rather than taxation and subsidies.

We have a conservative nanny state, Dean Baker.

Wealth redistributes upwards. Those who have made it to the top are being rewarded.